1. Organizational resources and competitive advantage
Chapter 3

2. The internal environment
Internal environment analysis should be seen from a resource-based view of strategy: acquire and manage resources to achieve sustainable competitive advantage
Tangible and intangible resources – assets of an organization
Capabilities – skills or activities that create or use these resources
Core competence – a capability that creates a competitive advantage
Core incompetence - a lack of a capability that leads to a competitive disadvantage
Distinctive competence – a core competence that a firm performs better than the competition

3. Examples of human resources and human capabilities
Superior CEO characteristics
Outstanding board of directors
Experienced managers
Well-trained, motivated, loyal employees
Capabilities:
Executive leadership skills
Outstanding governance
Excellent management development and retention
Effective decision making
Top-notch training and motivational practices

4. Examples of physical resources and physical capabilities
State-of-the-art machinery, plant
Superior locations
Excellent access to raw materials
Patents, trademarks, secrets
Capabilities:
Efficient production and service delivery
Ability to identify superior locations
Excellent logistics and supply chain management practices
Strong research and development skills
Ability to leverage patents, trademarks and secrets

5. Examples of financial resources and financial capabilities
Strong cash flow
Strong balance sheet
Capacity to borrow/credit ratings
Superior past performance
Capabilities:
Ability to manage and generate internal funds
Asset management
Leverage capabilities
Ability to control costs and sustain profitability

6. Examples of knowledge and learning resources and knowledge and learning capabilities
State-of-the-art information systems
Extensive line-up of products and services
New business start-ups
Total quality management, six-sigma, ISO certifications
Capabilities:
Superior technology development
Strong research and development practices
Management supports internal entrepreneurship
Excellent innovation and learning activities

7. Examples of general organizational resources and general organizational capabilities
Excellent reputation
Well-known brands
Excellent structure and culture
Superior management systems
Strong relationships with external stakeholders
Capabilities:
Public relations activities
Marketing, pricing, advertising, distribution capabilities
Ability to track customer buying habits through customer loyalty programs
Corporate social responsibility actions

8. Michael Porter’s Value Chain Analysis
4–8

9. To be A CORE COMPETENCE, THE ANSWER SHOULD BE “YES” TO BOTH OF THESE QUESTIONS
IS THE CAPABILITY VALUABLE?
A capability has value if the can use it to provide a good or service at a low cost or to provide a good or service that is more desirable to the consumer.
IS THE CAPABILITY UNIQUE?
A capability is unique if only one or a small group of firms possess it.
If the capability satisfies both questions, then it has the potential for a competitive advantage.

10. Strategic strength YES Core Competence Is it valuable?
Capability
Is it valuable?
Is it unique?
Strategic Strength
YES

11. Strategic weakness YES Core Competence Lack of Capability
Is it valuable?
Is it unique?
Strategic Weakness
YES